Analysis
The claimants were the step-children of Arthur Ronald Towns (Mr Towns). Mr Towns had commenced the claim on 5 October 2007 and had died on 3 June 2008. The claimants were substituted for Mr Towns on 3 September 2008 as executors of his estate. Repayment was sought of sums totalling £127,000 said to have been withdrawn by the first defendant (Henry Pulbrook) from an account in the joint names of Mr Towns and his late wife Edith Anne Towns (Mrs Towns). The claimants were Mrs Towns’ children from her first marriage.
Each of the claimants and the defendants was a descendant of Sir Eustace Pulbrook. Henry Pulbrook was a former stockbroker who had managed the financial affairs of a number of people, including Mr and Mrs Towns. Henry Pulbrook was also trustee of three family trusts. In 1991, Mr and Mrs Towns opened a joint account (the joint account) and gave Henry Pulbrook a mandate to draw on it. By an affidavit dated 22 August 1994, Mr and Mrs Towns declared that the first £135,000 in the joint account belonged to Mr Towns and any balance in excess of £135,000 belonged to Mrs Towns (the 1994 declaration). Henry Pulbrook claimed this was varied by an oral agreement in 2001 that the joint account would be held in half shares on the death of either of Mr or Mrs Towns.
In 2005, the claimants’ solicitors wrote a letter before claim to the defendants and Mrs Towns raising concerns about Henry Pulbrook’s conduct as trustee. Mrs Towns responded to her solicitors that she fully supported Henry Pulbrook’s actions and criticised her children’s actions. In November 2005, Mrs Towns wrote a letter undertaking to indemnify the defendants against legal costs attributable to any action brought by the claimants (November 2005 indemnity letter). Mrs Towns died on 8 December 2005.
On 27 January 2006, the claimants’ solicitors asserted that the November 2005 indemnity letter was void in that it was not a deed, there was no consideration and it had been procured by undue influence. Mr Towns appointed Henry Pulbrook as his attorney under an enduring power of attorney (EPA) dated 10 February 2006. Mr Towns signed an indemnity in respect of the defendants’ legal fees on 6 March 2006 (the March 2006 letter), referring to respecting Mrs Towns’ wishes and condemning the conduct of his step-children and their attacks on Mrs Towns’ competence, abilities and wisdom. Mr Towns executed a deed dated 6 March 2006 to reflect the indemnity provided in the March 2006 letter (March 2006 deed). Mr Towns did not receive independent legal advice before signing the March 2006 deed. Henry Pulbrook stated that this was because Mr Towns did not want to visit his solicitor owing to the narrow and steep staircase at their office.
Henry Pulbrook transferred £65,277.39 from the joint account on 6 July 2006, on the basis that this represented Mrs Towns’ half interest in the joint account at the date of her death. Much of this money was applied by Henry Pulbrook to pay his legal fees (Mrs Towns’ indemnity payments), which Henry Pulbrook claimed to be entitled to do pursuant to the November 2005 indemnity letter. The claimants contended that when the payment was made the entire balance of the joint account belonged to Mr Towns pursuant to the 1994 declaration.
Further sums totalling £66,000 were applied by Henry Pulbrook towards his legal fees in February and March 2007 (Mr Towns’ indemnity payments). Henry Pulbrook contended that he was entitled to make these payments pursuant to the March 2006 deed. The claimants contended that the March 2006 deed was void on the ground of non est factum or should be set aside in equity for undue influence.
The claimants also sought the return of £2,405, representing moneys taken by Henry Pulbrook in respect of his fees for managing the financial affairs of Mr and Mrs Towns (fee payments).
Mr Towns came to question Henry Pulbrook’s bona fides and revoked the EPA in favour of Henry Pulbrook and executed an EPA appointing the third claimant as his attorney on 23 June 2007. A further will was executed by Mr Towns on 7 September 2007. Mr Towns brought the claim on 5 October 2007 seeking the return of sums paid out of the joint account by Henry Pulbrook. The first claimant was appointed Mr Towns’ litigation friend on 19 March 2008. On 3 June 2008, Mr Towns died. Henry Pulbrook disputed that the claim was properly brought and contended that Mr Towns had either lacked capacity or was subject to duress.
Held (allowing the claim in part)
(1) Although Mr Towns’ mental condition declined from the end of 2007, he had capacity to instruct solicitors and to pursue the claim (paras 124-125). Even if this was not the case and Mr Towns had become a protected party prior to the first claimant’s appointment as his litigation friend, the position should be regularised retrospectively on the basis that everyone had acted in good faith and there was no manifest disadvantage (para 126).
(2) The claimants’ suggestion of non est factum in respect of the March 2006 deed failed. To succeed, reliance would have to be placed on Mr Towns’ witness statement but the evidence showed that at the time it was made his recollection of events was poor (paras 134-137).
(3) As to undue influence, this was a paradigm case where the presumption arose (para 142). Undue influence may be presumed on proof of (1) a relationship of influence and (2) a transaction that excites suspicion or calls for an explanation. The burden then shifted to the defendant to provide an explanation (para 139). There could be no doubt that the relationship between Mr Towns and Henry Pulbrook at the time of the March 2006 deed was one of influence (para 140). It was also plain that the March 2006 deed excited suspicion in that if it was upheld it was potentially extremely disadvantageous to Mr Towns and advantageous to Henry Pulbrook. In the events that had happened, Mr Towns would have lost the bulk of his wealth (para 141).
(4) Henry Pulbrook had failed to rebut the presumption. His explanation of why Mr Towns had not had legal advice was simply incredible (para 154). Both the March 2006 letter and the March 2006 deed would be set aside in equity. It followed that the claim to Mr Towns’ indemnity payments was made out in that there was no basis for Henry Pulbrook to have made them (para 157).
(5) As to Mrs Towns’ indemnity payments, Henry Pulbrook’s explanation for not documenting the alleged 2001 oral variation of the 1994 declaration was incredible (para 168]) and his evidence was rejected (para 173). Consequently, the 1994 declaration remained effective and the entirety of the money in the joint account belonged to Mr Towns at the date of Mrs Towns’ death. The November 2005 letter could not be relied on by Henry Pulbrook to make the payments (para 177). Accordingly, this part of the claimants’ claim was made out (para 179).
(6) The fee payments taken by Henry Pulbrook for managing Mr and Mrs Towns’ affairs were supported by a long history of substantially similar payments that had been made and accepted by Mr and Mrs Towns and this part of the claimants’ claim failed (paras 196-200).
Judgment Sheldon QC: [1] This is the trial of claims originally brought by Arthur Ronald Towns (Mr Towns) for repayment of sums totalling approximately £127,000 drawn from a joint account in the names of Mr Towns and his wife Edith Anne Towns (Mrs Towns) at the Moorgate Branch of Barclays Bank, account number 30930695 (the …Continue reading "Curtis & ors v Pulbrook & ors [2009] EWHC 782 (Ch)"